Obama pipeline decision may preview energy policy

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(AP file photo)

Protesters against the Keystone XL pipeline dressed as referees throw red penalty flags in January during a rally on Capitol Hill in Washington. Embarking on a second term, President Barack Obama faces mounting pressure on a decision he had put off during his re-election campaign: whether to approve the $7 billion proposed Keystone XL oil pipeline between the U.S. and Canada.

WASHINGTON – It’s a decision President Barack Obama put off during the 2012 campaign, but now that he’s won a second term, his next move on a proposed oil pipeline between the U.S. and Canada may signal how he will deal with climate and energy issues in the four years ahead.

Obama is facing increasing pressure to determine the fate of the $7 billion Keystone XL project, with environmental activists and oil producers each holding out hope that the president, freed from the political constraints of re-election, will side with them on this and countless other related issues down the road.

On its surface, it’s a choice between the promise of jobs and economic growth and environmental concerns. But it’s also become a proxy for a broader fight over American energy consumption and climate change, amplified by superstorm Sandy and the conclusion of an election that was all about the economy.

“The broader climate movement is absolutely looking at this administration’s Keystone XL decision as a really significant decision to signal that dirty fuels are not acceptable in the U.S.,” said Danielle Droitsch, a senior attorney with the Natural Resources Defense Council.

Once content with delays that have kept the pipeline from moving forward at full speed, opponents of Keystone XL have launched protests in recent weeks at the White House and in Texas urging Obama to kill the project outright. On Capitol Hill, support for the pipeline appears to be gaining.

But Obama has shown little urgency about the pipeline, which would carry crude oil about 1,700 miles from western Canada to Texas Gulf Coast refineries. The pipeline requires State Department approval because it crosses an international boundary.

The pipeline became an issue in the campaign, and Obama put it on hold while a plan was worked out to avoid routing it through Nebraska’s environmentally sensitive Sandhills region.

TransCanada, the company applying to build it, revised the route, but that caused the lengthy environmental review process to start over. In the meantime, the company split the project into two parts, starting construction in August on a southern segment between Oklahoma and Texas even as it waits for approval for the northern segment that crosses the Canadian border.

Although the lower leg didn’t require Obama’s sign-off, he gave it his blessing in March anyway, irking environmental activists who see the pipeline as a slap to efforts to reduce oil consumption and fend off climate change.

“At a time when we are desperately trying to bend the emissions curve downwards, it is wrong to open up a new source of energy that is more carbon intensive and makes the problem worse,” wrote former Vice President Al Gore, now a climate activist, in an email.

Still, in an otherwise highly polarized political climate, access to affordable energy has become a rare issue with bipartisan appeal.

“It’s just a no-brainer,” Sen. Mary Landrieu, D-La., told The Associated Press. “Canada is going to export this oil. It’s either going to come to the U.S. or it’s going to go to Russia or China. Even Democrats that aren’t really excited about oil and gas development generally can figure that out.”

Many Democrats from states whose economies depend on oil support the pipeline. So do some trade unions, whose workers stand to gain thousands of new construction jobs. While environmentalists make up an important part of their base, Democratic lawmakers are under intense pressure to create jobs and reduce American reliance on Mideast oil.

There’s less variation among Republicans, who generally support the project.

But in Texas, a deep red state that normally embraces the oil industry, the project has drawn intense opposition from landowners who argue their property along the pipeline’s route is being unfairly condemned. Their complaints, along with those from Texans who oppose an influx of foreign oil from Canadian tar sands, have fostered an unlikely alliance with environmentalists, who have taken to chaining themselves to machinery and trucks in an attempt to stall construction.

The messy politics may demonstrate why Obama punted the decision until after the election. Now both sides are applying pressure with renewed vigor.

A group of Keystone XL opponents, organized by climate activist Bill McKibben, marched on the White House in November, hoping to call attention to an issue that got barely a mention during the presidential campaign. Days earlier, nine Democratic and nine Republican senators sent Obama a letter urging him to stop stalling.

North Dakota Sen. John Hoeven, a Republican who helped organize the letter, said there’s been no response from the White House, which declined to comment.

The ratings agency Moody’s says it expects Obama will eventually approve the pipeline, but it won’t be quick. Take too long to approve the permitting, Moody’s warned in a November report, and Obama risks missing the boom in oil prices that instigated the pipeline in the first place.

Estimates for how many jobs the pipeline would create range from a few thousand up to 20,000 or more. At 36 inches in diameter, the pipeline will have an initial capacity of 700,000 barrels a day. That’s significant because demand for oil and gas pipelines is expected to surge over the next four years, according to a November report by The Freedonia Group, a market research firm.

A TransCanada spokesman said the company expects a decision by the State Department, which is determining whether the pipeline is in the national interest, in the first quarter of 2013, and hopes to start construction on the upper portion shortly thereafter. The longer the decision drags on, the less realistic that timeline appears to be.

Officials in Nebraska are close to completing their own study of the revised route, with a public hearing planned for Tuesday ahead of a final decision by Gov. Dave Heineman.